16/10/2020 - 11:30

Elmore wins federal court battle

16/10/2020 - 11:30

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Elmore has won a federal court battle launched by its former chief operating officer, who was dismissed for misleading the board about the viability of iron ore projects in India.

The federal court found Mr Freeman had been paid all necessary outstanding entitlements.

Exploration company Elmore has won a federal court battle launched by its former chief operating officer, who was dismissed for misleading the board about the viability of iron ore projects in India.

The company raised $10 million in May 2018 to progress a phase three expansion of its flagship Kurnool plant, telling the ASX that works were underway and confirming it had ordered equipment, appointed a project manager and would commission the project in 2019.

But in the months that followed, the company lost its managing director and chairman before being placed in a trading halt in December.

In January 2019, the company revealed it had cancelled the expansion after the drilling program found insufficient defined resources and announced it had launched an independent review of the original decision.

The company came under heavy scrutiny, with shareholders calling on the corporate regulator to investigate.

It was also criticised for utilising a law firm spearheaded by the brother of chief executive David Mendelawitz to conduct the review, the findings of which culminated in the termination of chief operating officer Sean Freeman for misconduct.

Mr Freeman, who worked for the company for more than a decade, fought back by launching legal action against Elmore and Mr Mendelawitz seeking compensation for unfair dismissal.

He also claimed the company had failed to pay him his entitlements after terminating his employment contract.

Mr Freeman alleged he did not receive entitlements he was owed under the National Employment Standards and claimed to have disclosed to the board the true position of the grade of the ore at the two projects in India.

During the hearing, the court was told Mr Freeman modified two geographical reports by Salva Resources in September 2010; amending the iron ore grades.

Mr Mendelawitz also told the court Mr Freeman posted to online finance forum HotCopper multiple times, under a pseudonym, giving views about the company’s share value and talking about himself in the third person.

According to a timeline of events detailed by Mr Mendelzawitz in court, he invited Mr Freeman to resign from his position rather than being sacked after the misconduct was discovered.

But Mr Freeman declined to resign after being told he would not receive a redundancy payment.

In a judgement handed down by the federal court on October 16, judge Alexander Street said Mr Freeman was evasive in answering questions regarding a report he created on June 8, 2011, and said it was not until he was pressed a third time that he admitted he was the author.

Judge Street did not accept Mr Freeman’s assertions that he previously disclosed the issues associated with the projects to the board and instead accepted evidence of Mr Freeman’s role in misleading the board in relation to their viability.

The court was also given evidence Mr Freeman had been paid all his outstanding entitlements.

Elmore had sought to launch a cross-claim, but the court dismissed it after finding it did not have substance.

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